Posted by: John Gilliland
July 11, 2007
Topic: Wage & Hour

previously posted June 19, 2007 

Last week was rather hectic.

The United States Supreme Court finally held that third party employers, such as home care agencies, can use the companionship services exemption to exempt certain of their employees from minimum wage and overtime pay under the federal Fair Labor Standards Act ("FLSA"). Coke v. Long Island Care at Home. The FLSA is the federal minimum wage and overtime pay law. A copy of the decision is attached to my last posting here on June 11, 2007.

The Coke decision generated many calls to our office from agencies and home care publications asking exactly what the decision means for agencies. There appears to be quite a bit of misunderstanding.

Let me try to clarify things.

What does the Supreme Court's Coke decision mean for a home care agency? It means a home care agency clearly can use the companionship services exemption to exempt certain of its employees from minimum wage and overtime pay under the FLSA. Coke had argued that her home care employer could not use that exemption to keep from paying her minimum wage and overtime pay.

So, my agency's employees are now exempt from minimum wage and overtime pay? No. All the Supreme Court held is that you can use the companionship services exemption. It did not hold that any of your employees fall within that exemption. For an employee to fall within that exemption, you still must prove the employee meets all the requirements for that exemption.

What are those requirements? Very, very briefly, there are four requirements to fall within the companionship services exemption: (1) the employee must provide companionship services; (2) not more than 20% of the employee's time in a workweek may be spent performing general household work; (3) the employee's duties may not require the training of an RN or LPN; and, (4) the services must be provided in the client/patient's private home. There is much more to it, but that is the essence of the requirements.

But, I've seen news reports saying the Court held that "home care workers" are not entitled to minimum wage and overtime pay. Doesn't that mean all my employees? No. It does not mean all of your agency's employee's are exempt from minimum wage and overtime pay. The decision applies only to employees who fall within the companionship services exemption.

Newspapers and TV reports have often reported the Coke decision as holding that "home care workers" are not entitled to minimum wage and overtime pay, but it is wrong and sloppy language. It probably is because they do not understand wage and hour law and, besides, are simply trying to just give a quick news report.

Does the Supreme Court's decision mean I don't have to worry about state law anymore? No. The Coke decision applies only to the federal FLSA. It does not change your state law at all. Even though an employee may fall within the federal companionship services exemption, he or she may still be entitled to minimum wage and/or overtime pay under your state law. An employee is always entitled to whatever is most beneficial to the employee - federal law or state law.

Is it now settled that home care agencies can use the companionship services exemption or can that change? It is settled in the courts. The Supreme Court's decision was unanimous and applies throughout the United States.

But, the Supreme Court based its decision on the FLSA and the interpretation given by the enforcement agency, the Wage and Hour Division of the United States Department of Labor. It was not based on the United States Constitution. Consequently, Congress could change the law to say third party employers, such as home care agencies, cannot use the companionship services exemption. It also is possible the Wage and Hour Division could change its interpretation.

How likely is that to happen? It's probably not likely with a Republican administration and Republican control of the House. If, however, there is a Democratic Administration or Congress, a change could occur through efforts of organized labor. Service Employees International Union ("SEIU") funded Coke's lawsuit and can be expected to look for other ways to end the companionship services exemption in home care.

What about my state law? Is it apt to change? I don't know, of course. But, if you are in a state that does not require minimum wage and overtime pay for employees who fall within the companionship services exemption, you should keep a close eye on efforts to change that in your state legislature. SEIU is active in attempting to require at least minimum wage for such employees under state law.

Where can I get the law/regulations concerning the companionship services exemption? The law and regulations are available at the Wage and Hour Division's website:

http://www.dol.gov/esa/whd/

Unfortunately, however, they will not be very helpful to you because much of what is required for the companionship services exemption arises through opinion letters and court decisions. The best resource for discussion of the exemption that I know of is in the Wage and Hour in Home Care manual I wrote. It can be purchased through our firm. Go to:

http://www.gilliland.com/CM/Custom/TOCPublications.asp

Okay, I admit that is a shameless plug, but I honestly do not know of as complete a discussion of the exemption anywhere else.

*******************

Bottomline, the Coke decision is a very import decision for home care agencies, but it only permits agencies to use the companionship services exemption. It does not automatically exempt anyone from minimum wage and overtime pay. Plus, even if an employee falls within that federal exemption, you still must check to see if the employee is entitled to minimum wage and/or overtime pay under state law.

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